Shell has raised its gas production forecast for the third quarter and told investors it expects a sharp increase in refining profit margins as the Iran war continues to disrupt global fuel supplies.
The energy giant now expects integrated gas production of between 740,000 and 780,000 barrels of oil equivalent per day (BOED) for July to September, up from its previous guidance of 570,000 to 630,000 BOED.
Production boost from ARC acquisition
The improved outlook would also mark a rise from the 631,000 BOED produced in the second quarter of 2026, which was hit by the Middle East conflict damaging output from Qatar.
The stronger gas production forecast is attributed to Shell's acquisition of Canadian energy firm ARC Resources, which was completed in early September.
Refining margins to leap
Shell also said it expects a refining margin of 42 US dollars per barrel for the third quarter for its chemicals and products division, a significant jump from 24 dollars per barrel in the second quarter.
Refining margins represent the difference between the cost of turning crude oil into fuel and the price at which those fuels are sold.
Shell and other energy companies have been operating their plants at high utilisation levels due to a global shortage of refineries, producing fuels such as diesel and jet fuel amid squeezed supplies.
Impact of Strait of Hormuz disruption
Disruption to crude oil supplies through the Strait of Hormuz has pushed up wholesale prices since the conflict began at the end of February. The vital transit route carried about a fifth of the world's oil and gas before the conflict.
In the UK, average diesel prices reached £2 a litre for the first time ever last week, while petrol has also risen sharply since the conflict began.
